ratio analysis for Satyam

pranya8

New member
INDEX

ACKNOWLEDGEMENT


INTRODUCTION & BACKGROUND


ACCOUNTING POLICIES


FINANCIAL STATEMENTS
- Balance Sheet upto 2007
- Profit Loss Account Upto 2007
- Balance sheet as on 31st Mar,2008
- Profit loss Account as on 31st Mat,32008


RATIO ANALYSIS
- Trend Analysis for Various Ratios


RECOMMENDATIONS















About Satyam
Delivering What Business Demands
Satyam Computer Services Ltd. (NYSE: "SAY") is a leading global consulting and IT services company, offering a wide array of solutions customized for a range of key verticals and horizontals. From strategy consulting right through to implementing IT solutions for customers, Satyam straddles the entire IT space. It has excellent domain competencies in verticals such as Automotive, Banking & Financial Service, Insurance & Healthcare, Manufacturing, Telecom-Infrastructure-Media-Entertainment-Semiconductors (TIMES). As a diverse end-to-end IT solutions provider, Satyam offers a range of expertise aimed at helping customers re-engineer and re-invent their businesses to compete successfully in an ever-changing marketplace.
Satyam's network spans 55 countries, across 6 continents. Nearly 40,000* dedicated and highly skilled IT professionals, work in development centers in India, the USA, the UK, the UAE, Canada, Hungary, Singapore, Malaysia, China, Japan and Australia* and serve over 558* global companies, including over 163* Fortune 500 corporations.
We have strategic technology and marketing alliances with over 90* top-notch companies that help us provide end-to-end services to our customers.
Satyam's need-driven deployment of domain and technology expertise brings to customers a range of solutions and products that enhance performance and competitiveness.
Our unique RightSourcingTM delivery model allows us to leverage local competencies to offer global competitiveness to our customers.
Our consulting and IT solutions have resulted in technology-intensive transformations that have met the most stringent of international quality standards. We have developed a unique quality hallmark, called eSCMSM (eSourcing Capability Model), for IT Enabled Services (ITES), in collaboration with Carnegie Mellon University and Accenture.
We follow a specially developed Business Continuity Model (BCM), which allows us to continue mission critical operations of our customers, even in the most challenging of times.
Core Purpose:
"To leverage information, knowledge and technology to enhance human endeavor."
Satyam develops and deploys intelligent applications in technology for diverse situations meeting varying requirements. Satyam helps businesses and organizations push the limits of excellence, and helps optimize their strengths.
Satyam's core values are expressed in the way teams are built and the manner in which they operate and achieve results. These values have been identified based on internal strengths of the organization. They are the guiding parameters for all organization-wide initiatives.
Belief in People:
Satyam believes its true strength lies in the potential of its Associates. Associates work in an atmosphere of trust and confidence. Every individual Associate is a leader. This leadership is expressed in the way tasks are assigned and taken up, the freedom with which workstyles are negotiated and high standards of quality set independently by each and every Associate. A high degree of operational freedom helps Associates exercise their creativity and expertise in approaching tasks and achieving Customer Delight.
Entrepreneurship:
At Satyam, it's ideas that drive people. A variety of programs help Associates create tangible value, constantly encouraging Associates to convert ideas into market value, in the true spirit of entrepreneurship.
Customer Orientation:
As a customer-centric enterprise, we are very sharply focussed on delivering not only what the customer demands but also providing them with the weapons to compete with. In other words we deliver business competitiveness. All this eventually leads to Customer Intimacy.

Pursuit of Excellence:

Achieving excellence in anything we do is a part of our corporate DNA. It is not just lipservice. Rather a process driven strategy that allows us to benchmark everything against the global best and then surpass it, so that we set the benchmark for others to follow. In the process we are always a couple of steps ahead of our nearest competitor. Satyam adheres to stringent Quality processes that meet and exceed international standards that are continuously monitored.
Corporate Social Responsibility:
As a larger expression of its Mission and Core Values, Satyam is actively involved in a variety of public service projects in Health, HIV/AIDS, Education, Environment, Livelihood, Street Children and Slum Development.
Working through Satyam Foundation, an umbrella organization that brings together committed Satyam associates and their spouses, the Company contributes to social causes and organizes initiatives for social change, primarily in the areas of education, environment and healthcare.










Board Of Directors
• Executive Directors:
• Mr. B. Ramalinga Raju (Founder & Chairman)
• Mr. B. Rama Raju (Co-Founder & CEO)
• Mr. Ram Mynampati (Board Member, President – Commercial and Healthcare Businesses, Chairman – Citisoft, Plc.)
• Non-Executive Directors:
• Professor M Rammohan Rao
• Dr. (Mrs.) Mangalam Srinivasan
• Prof. Krishna G. Palepu
• Mr. Vinod K Dham
Services Offered:
Application Development and Maintenance, Business Intelligence and Data Warehousing (BI&DW), Business Process Outsourcing (BPO), Consulting and Enterprise Solutions, Embedded Services, Engineering Solutions, Enterprise Storage Solutions, ERP, Infrastructure Management Services, Managed IT Services, Quality Consulting, GIS Technology, High-Tech Solutions, MES and LIMS, Silicon Design Services, Six Sigma Consulting
Development Centers: 25*
Bangalore, Basingstoke, Beijing, Bhubaneswar, Budapest, California, Chennai, Chicago, Dalian, Georgia, Guangzhou, Hartford, Hyderabad, Kaula Lumpur, Melbourne, Munich, Mississauga, New Jersey, Ontario, Pune, Sao Paulo, Shanghai, Singapore, Sydney, Tokyo, Wiesbaden.





Additional Information:
1. Subsidiaries:
• Nipuna Services Limited
• Satyam Technologies Inc.
• Satyam Computer Services ( Shanghai) Co Ltd
• Citisoft Plc.
2. Joint Ventures:
• Satyam Venture Engineering Services Pvt. Ltd.
• CA Satyam ASP Pvt. Ltd.
Financial Summary
Consolidated Indian GAAP Highlights for FY 2007:
• Revenue: Rs. 6,485 crore; a growth of 35.3% over fiscal 2006
• Total income: Rs. 6,668 crore; a growth of 35.8% over fiscal 2006
• Net Profit after Tax: Rs. 1,405 crore; a growth of 43.1% over fiscal 2006
Employee strength:
• Nearly 40,000*
(Include Subsidiaries and Joint Ventures)
Pioneering Effort
At Satyam, innovation and ideas-leadership are prized virtues. We encourage new ideas and an inventing attitude. Little surprise, as an Organization we have been successful in playing a pioneering role ever since our inception.



Some of our major contributions as pioneers have been:
1. Pioneers in Offshore Development
Satyam Computer Services Ltd., pioneered the Offshore Development Center model for software delivery. Harnessing the wealth of skilled human resources in India, Satyam delivers solutions and customization services to clients abroad, especially in the US, through this model.
2. Established India Development Centers
Satyam pioneered the concept of setting up exclusive development facilities for global players intending to outsource IT initiatives with us. Located in various cities in India, Satyam has equipped these state-of-the-art facilities with the best connectivity and infrastructure to provide IT solutions to clients. These IDCs now operate from various locations in India, giving Satyam clients an added advantage.
3. eSCM: A Quality Model for ITES/BPO
Satyam worked with the Carnegie Mellon University, USA, (Accenture was the third partner) to create eSCM, the only Quality model defining standards for the IT Enabled Services / Business Process Outsourcing space in the world.
4. RightSourcing Model
Satyam introduced its unique delivery model - RightSourcing - providing customers the optimum combination of onsite, offshore and offsite delivery.
Satyam Infoway
1. India's First Private ISP
Satyam's subsidiary, Satyam Infoway, became the first private Internet Service Provider (ISP) in India, when it started operation in 1998.
2. First Indian Internet firm on NASDAQ
Satyam Infoway was listed on NASDAQ (NASDAQ:SIFY) in November 1999, making it the first Indian Internet firm to trade on the premier US stock market. Infoway was oversubscribed by a factor of over 27, the largest ever for any Indian ADR/ADS offering.
Company Background
Satyam Computer Services is India's fourth largest information technology (IT) services provider in sales as well as in market capitalisation. Satyam was incorporated in 1987 as a private limited company. It floated its initial public offer in 1992. Satyam had commenced its operations through an offshore software project, initiated by its first Fortune 500 Client, Deere & Co. Satyam is a widely held company with institutions having a shareholding of 59.9 per cent.
Satyam's operations span 55 countries. It has six subsidiaries. It has a pan--India presence through its 28 offices. In 2006--07, its consolidated employee base increased to 39,552. Exports account for almost 75.9 per cent of its total sales revenues. North America contributes around 65 per cent of the sales revenue followed by Europe. Satyam serves over 558 global companies including over 163 Fortune 500 corporations.
It provides its services to various industries like automotive, banking, financial services & insurance (BFSI), health care, manufacturing and telecom-infrastructure-media-entertainment-semiconductors (TIMES). Satyam's range of expertise includes software development service, engineering service, ERP solution, customer relationship management, supply chain management, consulting and IT outsourcing among others. It operates in two segments namely IT and business process outsourcing (BPO) services. In the IT segment, it offers a range of services which includes application development and maintenance (ADM), consulting and enterprise business solutions (CEBS), extended engineering solutions (EES) and infrastructure management services (IMS). A large portion of the revenues come from ADM and CEBS services which together account for almost 89 per cent of its total sales revenues. Its BPO services are provided through its subsidiary company, Satyam BPO. The software services account for a larger share of the sales revenues as against the sales generated from the BPO segment. In 2006--07, software services accounted for 97.2 per cent of Satyam's revenues. The company expanded largely through the organic route. However, it has also made few acquisitions in the past. In 2005, Satyam acquired a 100 per cent stake in Singapore based Knowledge Dynamics, a leading data warehousing and business intelligence solutions provider. During the same year, it also acquired a 75 per cent stake in London based Citisoft Plc, a highly specialized business and systems consulting firm, focused exclusively on the investment management industry. In 2006--07, Satyam acquired the remaining 25 per cent stake in Citisoft Plc in an all cash deal worth Rs.27.5 crore. The company is establishing a global delivery centre in Nanjing, China with a seating capacity of 2,500 software professionals. It also plans to set up a subsidiary in Cairo, Egypt on the lines of its Nanjing subsidiary which will cater to its customers in the Middle East. It has also set up a 2000 seater development centre in Malaysia.
Accounting policies
Satyam Computer Services Ltd.

ACCOUNTING POLICIES FOR THE YEAR ENDED 31ST MARCH 2007.
Basis of presentation

The financial statements of the Company are prepared under historical cost convention in accordance with the Generally Accepted Accounting Principles (GAAP) applicable in India and the provisions of the Indian Companies Act, 1956.

Use of estimates

The preparation of the financial statements in conformity with the GAAP requires that the management makes estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities as at the date of the financial statements, and the reported amounts of revenue and expenses during the reported year. Actual results could differ from those estimates.

Revenue recognition

Revenue from professional services consist primarily of revenue earned from services performed on a "time and material" basis. The related revenue is recognized as and when the services are performed.

The Company also performs time bound fixed-price engagements, under which revenue is recognized using the percentage of completion method of accounting. The cumulative impact of any revision in estimates of the percentage of work completed is reflected in the year in which the change becomes known. Provisions for estimated losses on such engagements are made during the year in which a loss becomes probable and can be reasonably estimated.

Amounts received or billed in advance of services performed are recorded as advance from customers/unearned revenue. Unbilled revenue, included in debtors, represents amounts recognized based on services performed in advance of billing in accordance with contract terms.

Fixed assets

Fixed assets are stated at actual cost less accumulated depreciation. The actual cost capitalized includes material cost, freight, installation cost, duties and taxes, finance charges and other incidental expenses incurred during the construction/installation stage.

Gain/Loss arising on foreign exchange liabilities incurred for the purpose of acquiring fixed assets are adjusted in the carrying amount of the respective fixed assets.

Depreciation on fixed assets is computed on the straight line method over their estimated useful lives at the rates which are higher than the rates prescribed under Schedule XIV of the Companies Act, 1956. Individual assets acquired for less than Rs.5,000 are entirely depreciated in the year of acquisition.

The cost of and the accumulated depreciation for fixed assets sold, retired or otherwise disposed off are removed from the stated values and the resulting gains and losses are included in the profit and loss account.

Costs of application software for internal use are generally charged to revenue as incurred due to its estimated useful lives being relatively short, usually less than one year.

The estimated useful lives are as follows:

Estimated useful lives
Buildings 28 years
Computers 2 years
Plant and machinery (other than computers) 5 years
Software - used in development for projects 3 years
Office equipment 5 years
Furniture, Fixtures and Interiors 5 years
Vehicles 5 years

Capital work in progress

Assets under installation or under construction as at the Balance sheet date are shown as Capital work in progress. Advances paid towards acquisition of assets are also included under Capital work in progress.

Goodwill

Goodwill represents the difference between the purchase price and the book value of assets and liabilities acquired. Goodwill is amortized over the useful life of the asset. The goodwill is reviewed for impairment whenever events or changes in business circumstances indicate the carrying amount of assets may not be fully recoverable. If impairment is indicated, the asset is written down to its fair value.

Investments

Investments are classified into current investments and long-term investments. Current investments are carried at the lower of cost or market value. Any reduction in carrying amount and any reversals of such reductions are charged or credited to the profit and loss account. Long-term investments are carried at cost less provision made to recognize any decline, other than temporary, in the value of such investments.

Foreign currency transactions

Transactions in foreign currency are recorded at exchange rate prevailing on the date of transaction. Monetary assets and liabilities denominated in foreign currency are translated at the rate of exchange at the balance sheet date and resultant gain or loss is recognized in the profit and loss account.

Non-monetary assets and liabilities are translated at the rate prevailing on the date of transaction.

The operations of foreign branches of the company are of integral in nature and the financial statements of these branches are translated using the same principles and procedures of head office.

In case of forward exchange contract or any other financial instruments that is in substance a forward exchange contract to hedge the foreign currency risk which is on account of firm commitment and/or is a highly probable forecast transaction, the premium or discount arising at the inception of the contract is amortized as expense or income over the life of the contract.

Gain/Loss on settlement of transaction arising on cancellation or renewal of such a forward exchange contract is recognized as income or as expense for the period.

In all other cases the gain or loss on contract is computed by multiplying the foreign currency amount of the forward exchange contract by the difference between the forward rate available at the reporting date for the remaining maturity of the contract and the contracted forward rate (or the forward rate last used to measure a gain or loss on that contract for an earlier period), is recognized in the profit and loss account for the period.

Employee benefits
Contributions to defined Schemes such as Provident Fund, Employee State Insurance Scheme and Superannuation are charged as incurred on accrual basis. The Company also provides for gratuity and leave encashment in accordance with the requirements of revised Accounting Standard - 15 "Employee Benefits".

i) Taxes on income
Tax expense for the year comprises of current tax and deferred tax. Current taxes are measured at the amounts expected to be paid using the applicable tax rates and tax laws. Deferred tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the profit and loss account in the year of change. Deferred tax assets and deferred tax liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases and operating loss carry forwards.

j) Earnings Per Share
The earnings considered in ascertaining the Company's Earnings Per Share (EPS) comprises the net profit after tax (and includes the post tax effect of any extra ordinary items). The number of shares used in computing Basic EPS is the weighted average number of shares outstanding during the year. The number of shares used in computing Diluted EPS comprises of weighted average shares considered for deriving Basic EPS, and also the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted as of the beginning of the year, unless they have been issued at a later date. The diluted potential equity shares have been adjusted for the proceeds receivable had the shares been actually issued at fair value (i.e. average market value of the outstanding shares). The number of shares and potentially dilutive shares are adjusted for share splits/reverse share splits and bonus shares, as appropriate.

k) Associate Stock Option scheme
Stock options granted to the associates under the stock option schemes established after June 19, 1999 are evaluated as per the accounting treatment prescribed by Employee Stock Option Scheme and Employee Stock Purchase Scheme Guidelines, 1999 issued by Securities and Exchange Board of India. Accordingly the excess of market value of the stock options as on the date of grant over the exercise price of the options is recognized as deferred employee compensation and is charged to profit and loss account on graded vesting basis over the vesting period of the options. The un-amortized portion of the deferred employee compensation is shown under Reserves and Surplus.

l) Research and Development

Revenue expenditure incurred on research and development is charged to revenue in the year/period in which it is incurred. Assets used for research and development activities are included in fixed assets.












Financial Statement:-
Balance Sheet Statement


Profit & Loss Statement:-









Ratio Analysis :-
Ratio Analysis is an important tool for undertaking the financial statement analysis of any organization. The performance of any organization can be explained on the basis of the four types of ratios:-
1) Liquidity Ratio
2) Solvency Ratio
3) Profitability Ratio
4) Market Based Returns
So in case of Ashok Leyland Ltd. following are the various ratios of the annual report of 2007-2008 by analyzing the balance sheet and Profit & Loss Account.
Current Ratios & Quick Ratios

Current Ratio measure the ability of the enterprise to meet its current obligations & is the relationship between Current Assets and Current Liabilities. In the operating cycle and by seeing the trend the ratio is decreasing over period. So higher the Current Ratio, higher the short-term liquidity of the firm. A Current Ratio of 2:1 is generally considered to be acceptable. If the Current Ratio is greater than 1, it implies that some portions of the current assets is being funded by the long term funds and if it is decreasing over time it means that the firm is losing its liquidity.

Interpretation
In the Current Trend Analysis it was found that Current Ratio was declining for the past five years which shows a concern on Liquidity of the firm but been ideal ratio been 2:1 still favours the company about its liquidity to pay of short term liabilities. It has also been analysed that the Company does not have an Inventory in its closing stock so its Quick Ratio & Current Ratio is same




Profitability Ratio:
The profitability ratio consists of a group of ratios that indicates the ability of a firm to generate and distribute profit. The higher is this ratio the better is this for the company. The profitability of a firm can be analyzed by studying the following:

Gross Profit Margin

Gross profit Ratio shows the profits relative to sales after the direct production costs are deducted. It may be used as an indicator of the efficiency of the production operation and the relation between production costs and selling price.
Interpretation
If we see the graph the trend is slowing decreasing that means the efficiency of the firm is firmly declining because of increase in cost without change in sale prices and hence management should take care of Operational strategies.

Net Profit Ratio:
Net Profit Ratio shows the earning left for shareholders (both equity and preference) as a percentage of net sales. It measures the overall efficiency of production, administration, selling, financing, pricing, and tax management.

Interpretation
It sees that the company has increased its expenses in comparison to increase in sales which has effected its Net Profitability.

Return On Equity
Return On Equity Helps to understand about the return been earned by the company on its investment and helps in knowing the utilization of funds
Interpretation
Here, we find in the graph that there has been a slight decrease which shows that company might not be earning good returns as compared to earlier years .

Return On Assets

Interpretation
The Company’s Return on Assets show that the Proper utilization of assets are been made by the company in comparison to increase in sales in long run but in short run the company needs to work out strategies for increasing its return which is decreasing.



Fixed Asset Turnover

Interpretation
If we see the trend of this graph we see that the graph is increasing in 2007-2008 & the trend is somewhat increasing that means the asset base had started increasing. It could be because assets has been properly capitalized by ther company and return on assets are good.

Leverage Ratios:-
Solvency ratios are the group of ratios which show the ability of a firm to meet its long term loans. It gives an indication of how a business is financing its assets. It is one of the major financing decisions for the company. It is also called the capital structure of a firm. Following are the ratios that are matters of concern to any organization:-

Interest Coverage Ratio
Coverage ratios give the relationship between the financial charges of a firm and its ability to service them. One measure of a firm’s ability to handle financial burdens is the interest coverage ratio, also referred to as the times interest-coverage ratio. This ratio tells us how many times the firm can cover or meet the interest payments associated with debts.


Interpretation
We have first an downward trend and now this trend is showing a upward shift in 2007-08 that means that now the firms ability to pay its interest expense is increasing in this period.

Ownership Ratios:-
These ratio will help the stockholders to analyze their present and future investment in a firm. Stockholders are interested to know how the value of their holdings is affected by certain variables. These ratios compare the investment value with factors such as debt, earnings,dividends and the stock’s market price. By understanding the liquidity and profitability ratios, one can gain insights into the soundness of the firm’s business activities, whereas by analyzing the ownership ratios, the analyst can assess the likely future value of the market.
Earnings Ratios:-
The earnings ratios are Earning per share, price-earning ratio(P/e Ratio) and capitalization ratio.
Earning Per Share( EPS):-
For calculating EPS we first calculate No. of Outstanding shares that is given by
Shareholders Capital
Face Value of Shares






Interpretation:
The Firm capability to pay its investors has been good and firm is doing well and during the year since there is a positive increase in EPS & the investors stock value has increased in comparison .

Price Earning Ratios :-
This ratio gives the relationship between the market price of the stock and its earnings by revealing how earnings affect the market price of the firm’s stock. It is the most popular financial ratio in the stock market for secondary market investors. The main use of P/E ratio is it helps to determine the expected value of a stock.

Interpretation
From the above trend it can be seen that the P/Ae ratio is decreasing – EPS is decreasing and market price is continously decreasing- that simply means that the stock is not performing good on any index.

Capitalization Rate:-
The P/E ratio also may be used to calculate the rate of return investors expect before they purchase a stock. The reciprocal of the P/e ratio gives this return.


From the above trend it is clear that the rate of return to the investor first decreased and now gradually it is increasing. In the long run it will surely give return on its stock.

RECOMMENDATIONS:
To Management:
It has been analyzed that Solvency and Profitability has been steady for the company but an improvement in Debtors Turnover Ratio’s can help company in boosting the profits.

To Creditors
Short Term Creditors: The Company’s financial strength is good and anytime during the year the company can pay the amount as and when due.
Long Term Creditors: The Company is perfectly solvent and can pay debt and interest on it on proper time.

To Government
Been an FMCG Company, there has been a great progress by the company during the year and has large scope to progress with greater service capability

To Financial Institutions
The Profit Earning Capacity and Long Term Solvency position shall not be a concern because of good performance during the past years.
To Investors
It has been analyzed that the company is a Going Concern Entity with a Market Price of around Rs.1400, EPS of around Rs. 80 which shows that the company has a bright future prospect which can lead to huge Returns.

To Employees
The Performance of the Company has improved during the year which shows that if the company performs in the same manner there are huge opportunities for the company to reach new heights.
 

sach_anand

New member
thank u.............................................................................................................
 

saher1210

New member
Hi dear friends, Can any one look at the annual reports of Glaxo Smith Kline(GSK) pharmaceutical company and find out the ratios for me please..... It will be appreciated. Thanx
 

abhishreshthaa

New member

Attachments

  • 21443698-Financial-Report-on-GSK-2007-GlaxoSmithKline.pdf
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INDEX

ACKNOWLEDGEMENT


INTRODUCTION & BACKGROUND


ACCOUNTING POLICIES


FINANCIAL STATEMENTS
- Balance Sheet upto 2007
- Profit Loss Account Upto 2007
- Balance sheet as on 31st Mar,2008
- Profit loss Account as on 31st Mat,32008


RATIO ANALYSIS
- Trend Analysis for Various Ratios


RECOMMENDATIONS















About Satyam
Delivering What Business Demands
Satyam Computer Services Ltd. (NYSE: "SAY") is a leading global consulting and IT services company, offering a wide array of solutions customized for a range of key verticals and horizontals. From strategy consulting right through to implementing IT solutions for customers, Satyam straddles the entire IT space. It has excellent domain competencies in verticals such as Automotive, Banking & Financial Service, Insurance & Healthcare, Manufacturing, Telecom-Infrastructure-Media-Entertainment-Semiconductors (TIMES). As a diverse end-to-end IT solutions provider, Satyam offers a range of expertise aimed at helping customers re-engineer and re-invent their businesses to compete successfully in an ever-changing marketplace.
Satyam's network spans 55 countries, across 6 continents. Nearly 40,000* dedicated and highly skilled IT professionals, work in development centers in India, the USA, the UK, the UAE, Canada, Hungary, Singapore, Malaysia, China, Japan and Australia* and serve over 558* global companies, including over 163* Fortune 500 corporations.
We have strategic technology and marketing alliances with over 90* top-notch companies that help us provide end-to-end services to our customers.
Satyam's need-driven deployment of domain and technology expertise brings to customers a range of solutions and products that enhance performance and competitiveness.
Our unique RightSourcingTM delivery model allows us to leverage local competencies to offer global competitiveness to our customers.
Our consulting and IT solutions have resulted in technology-intensive transformations that have met the most stringent of international quality standards. We have developed a unique quality hallmark, called eSCMSM (eSourcing Capability Model), for IT Enabled Services (ITES), in collaboration with Carnegie Mellon University and Accenture.
We follow a specially developed Business Continuity Model (BCM), which allows us to continue mission critical operations of our customers, even in the most challenging of times.
Core Purpose:
"To leverage information, knowledge and technology to enhance human endeavor."
Satyam develops and deploys intelligent applications in technology for diverse situations meeting varying requirements. Satyam helps businesses and organizations push the limits of excellence, and helps optimize their strengths.
Satyam's core values are expressed in the way teams are built and the manner in which they operate and achieve results. These values have been identified based on internal strengths of the organization. They are the guiding parameters for all organization-wide initiatives.
Belief in People:
Satyam believes its true strength lies in the potential of its Associates. Associates work in an atmosphere of trust and confidence. Every individual Associate is a leader. This leadership is expressed in the way tasks are assigned and taken up, the freedom with which workstyles are negotiated and high standards of quality set independently by each and every Associate. A high degree of operational freedom helps Associates exercise their creativity and expertise in approaching tasks and achieving Customer Delight.
Entrepreneurship:
At Satyam, it's ideas that drive people. A variety of programs help Associates create tangible value, constantly encouraging Associates to convert ideas into market value, in the true spirit of entrepreneurship.
Customer Orientation:
As a customer-centric enterprise, we are very sharply focussed on delivering not only what the customer demands but also providing them with the weapons to compete with. In other words we deliver business competitiveness. All this eventually leads to Customer Intimacy.

Pursuit of Excellence:

Achieving excellence in anything we do is a part of our corporate DNA. It is not just lipservice. Rather a process driven strategy that allows us to benchmark everything against the global best and then surpass it, so that we set the benchmark for others to follow. In the process we are always a couple of steps ahead of our nearest competitor. Satyam adheres to stringent Quality processes that meet and exceed international standards that are continuously monitored.
Corporate Social Responsibility:
As a larger expression of its Mission and Core Values, Satyam is actively involved in a variety of public service projects in Health, HIV/AIDS, Education, Environment, Livelihood, Street Children and Slum Development.
Working through Satyam Foundation, an umbrella organization that brings together committed Satyam associates and their spouses, the Company contributes to social causes and organizes initiatives for social change, primarily in the areas of education, environment and healthcare.










Board Of Directors
• Executive Directors:
• Mr. B. Ramalinga Raju (Founder & Chairman)
• Mr. B. Rama Raju (Co-Founder & CEO)
• Mr. Ram Mynampati (Board Member, President – Commercial and Healthcare Businesses, Chairman – Citisoft, Plc.)
• Non-Executive Directors:
• Professor M Rammohan Rao
• Dr. (Mrs.) Mangalam Srinivasan
• Prof. Krishna G. Palepu
• Mr. Vinod K Dham
Services Offered:
Application Development and Maintenance, Business Intelligence and Data Warehousing (BI&DW), Business Process Outsourcing (BPO), Consulting and Enterprise Solutions, Embedded Services, Engineering Solutions, Enterprise Storage Solutions, ERP, Infrastructure Management Services, Managed IT Services, Quality Consulting, GIS Technology, High-Tech Solutions, MES and LIMS, Silicon Design Services, Six Sigma Consulting
Development Centers: 25*
Bangalore, Basingstoke, Beijing, Bhubaneswar, Budapest, California, Chennai, Chicago, Dalian, Georgia, Guangzhou, Hartford, Hyderabad, Kaula Lumpur, Melbourne, Munich, Mississauga, New Jersey, Ontario, Pune, Sao Paulo, Shanghai, Singapore, Sydney, Tokyo, Wiesbaden.





Additional Information:
1. Subsidiaries:
• Nipuna Services Limited
• Satyam Technologies Inc.
• Satyam Computer Services ( Shanghai) Co Ltd
• Citisoft Plc.
2. Joint Ventures:
• Satyam Venture Engineering Services Pvt. Ltd.
• CA Satyam ASP Pvt. Ltd.
Financial Summary
Consolidated Indian GAAP Highlights for FY 2007:
• Revenue: Rs. 6,485 crore; a growth of 35.3% over fiscal 2006
• Total income: Rs. 6,668 crore; a growth of 35.8% over fiscal 2006
• Net Profit after Tax: Rs. 1,405 crore; a growth of 43.1% over fiscal 2006
Employee strength:
• Nearly 40,000*
(Include Subsidiaries and Joint Ventures)
Pioneering Effort
At Satyam, innovation and ideas-leadership are prized virtues. We encourage new ideas and an inventing attitude. Little surprise, as an Organization we have been successful in playing a pioneering role ever since our inception.



Some of our major contributions as pioneers have been:
1. Pioneers in Offshore Development
Satyam Computer Services Ltd., pioneered the Offshore Development Center model for software delivery. Harnessing the wealth of skilled human resources in India, Satyam delivers solutions and customization services to clients abroad, especially in the US, through this model.
2. Established India Development Centers
Satyam pioneered the concept of setting up exclusive development facilities for global players intending to outsource IT initiatives with us. Located in various cities in India, Satyam has equipped these state-of-the-art facilities with the best connectivity and infrastructure to provide IT solutions to clients. These IDCs now operate from various locations in India, giving Satyam clients an added advantage.
3. eSCM: A Quality Model for ITES/BPO
Satyam worked with the Carnegie Mellon University, USA, (Accenture was the third partner) to create eSCM, the only Quality model defining standards for the IT Enabled Services / Business Process Outsourcing space in the world.
4. RightSourcing Model
Satyam introduced its unique delivery model - RightSourcing - providing customers the optimum combination of onsite, offshore and offsite delivery.
Satyam Infoway
1. India's First Private ISP
Satyam's subsidiary, Satyam Infoway, became the first private Internet Service Provider (ISP) in India, when it started operation in 1998.
2. First Indian Internet firm on NASDAQ
Satyam Infoway was listed on NASDAQ (NASDAQ:SIFY) in November 1999, making it the first Indian Internet firm to trade on the premier US stock market. Infoway was oversubscribed by a factor of over 27, the largest ever for any Indian ADR/ADS offering.
Company Background
Satyam Computer Services is India's fourth largest information technology (IT) services provider in sales as well as in market capitalisation. Satyam was incorporated in 1987 as a private limited company. It floated its initial public offer in 1992. Satyam had commenced its operations through an offshore software project, initiated by its first Fortune 500 Client, Deere & Co. Satyam is a widely held company with institutions having a shareholding of 59.9 per cent.
Satyam's operations span 55 countries. It has six subsidiaries. It has a pan--India presence through its 28 offices. In 2006--07, its consolidated employee base increased to 39,552. Exports account for almost 75.9 per cent of its total sales revenues. North America contributes around 65 per cent of the sales revenue followed by Europe. Satyam serves over 558 global companies including over 163 Fortune 500 corporations.
It provides its services to various industries like automotive, banking, financial services & insurance (BFSI), health care, manufacturing and telecom-infrastructure-media-entertainment-semiconductors (TIMES). Satyam's range of expertise includes software development service, engineering service, ERP solution, customer relationship management, supply chain management, consulting and IT outsourcing among others. It operates in two segments namely IT and business process outsourcing (BPO) services. In the IT segment, it offers a range of services which includes application development and maintenance (ADM), consulting and enterprise business solutions (CEBS), extended engineering solutions (EES) and infrastructure management services (IMS). A large portion of the revenues come from ADM and CEBS services which together account for almost 89 per cent of its total sales revenues. Its BPO services are provided through its subsidiary company, Satyam BPO. The software services account for a larger share of the sales revenues as against the sales generated from the BPO segment. In 2006--07, software services accounted for 97.2 per cent of Satyam's revenues. The company expanded largely through the organic route. However, it has also made few acquisitions in the past. In 2005, Satyam acquired a 100 per cent stake in Singapore based Knowledge Dynamics, a leading data warehousing and business intelligence solutions provider. During the same year, it also acquired a 75 per cent stake in London based Citisoft Plc, a highly specialized business and systems consulting firm, focused exclusively on the investment management industry. In 2006--07, Satyam acquired the remaining 25 per cent stake in Citisoft Plc in an all cash deal worth Rs.27.5 crore. The company is establishing a global delivery centre in Nanjing, China with a seating capacity of 2,500 software professionals. It also plans to set up a subsidiary in Cairo, Egypt on the lines of its Nanjing subsidiary which will cater to its customers in the Middle East. It has also set up a 2000 seater development centre in Malaysia.
Accounting policies
Satyam Computer Services Ltd.

ACCOUNTING POLICIES FOR THE YEAR ENDED 31ST MARCH 2007.
Basis of presentation

The financial statements of the Company are prepared under historical cost convention in accordance with the Generally Accepted Accounting Principles (GAAP) applicable in India and the provisions of the Indian Companies Act, 1956.

Use of estimates

The preparation of the financial statements in conformity with the GAAP requires that the management makes estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities as at the date of the financial statements, and the reported amounts of revenue and expenses during the reported year. Actual results could differ from those estimates.

Revenue recognition

Revenue from professional services consist primarily of revenue earned from services performed on a "time and material" basis. The related revenue is recognized as and when the services are performed.

The Company also performs time bound fixed-price engagements, under which revenue is recognized using the percentage of completion method of accounting. The cumulative impact of any revision in estimates of the percentage of work completed is reflected in the year in which the change becomes known. Provisions for estimated losses on such engagements are made during the year in which a loss becomes probable and can be reasonably estimated.

Amounts received or billed in advance of services performed are recorded as advance from customers/unearned revenue. Unbilled revenue, included in debtors, represents amounts recognized based on services performed in advance of billing in accordance with contract terms.

Fixed assets

Fixed assets are stated at actual cost less accumulated depreciation. The actual cost capitalized includes material cost, freight, installation cost, duties and taxes, finance charges and other incidental expenses incurred during the construction/installation stage.

Gain/Loss arising on foreign exchange liabilities incurred for the purpose of acquiring fixed assets are adjusted in the carrying amount of the respective fixed assets.

Depreciation on fixed assets is computed on the straight line method over their estimated useful lives at the rates which are higher than the rates prescribed under Schedule XIV of the Companies Act, 1956. Individual assets acquired for less than Rs.5,000 are entirely depreciated in the year of acquisition.

The cost of and the accumulated depreciation for fixed assets sold, retired or otherwise disposed off are removed from the stated values and the resulting gains and losses are included in the profit and loss account.

Costs of application software for internal use are generally charged to revenue as incurred due to its estimated useful lives being relatively short, usually less than one year.

The estimated useful lives are as follows:

Estimated useful lives
Buildings 28 years
Computers 2 years
Plant and machinery (other than computers) 5 years
Software - used in development for projects 3 years
Office equipment 5 years
Furniture, Fixtures and Interiors 5 years
Vehicles 5 years

Capital work in progress

Assets under installation or under construction as at the Balance sheet date are shown as Capital work in progress. Advances paid towards acquisition of assets are also included under Capital work in progress.

Goodwill

Goodwill represents the difference between the purchase price and the book value of assets and liabilities acquired. Goodwill is amortized over the useful life of the asset. The goodwill is reviewed for impairment whenever events or changes in business circumstances indicate the carrying amount of assets may not be fully recoverable. If impairment is indicated, the asset is written down to its fair value.

Investments

Investments are classified into current investments and long-term investments. Current investments are carried at the lower of cost or market value. Any reduction in carrying amount and any reversals of such reductions are charged or credited to the profit and loss account. Long-term investments are carried at cost less provision made to recognize any decline, other than temporary, in the value of such investments.

Foreign currency transactions

Transactions in foreign currency are recorded at exchange rate prevailing on the date of transaction. Monetary assets and liabilities denominated in foreign currency are translated at the rate of exchange at the balance sheet date and resultant gain or loss is recognized in the profit and loss account.

Non-monetary assets and liabilities are translated at the rate prevailing on the date of transaction.

The operations of foreign branches of the company are of integral in nature and the financial statements of these branches are translated using the same principles and procedures of head office.

In case of forward exchange contract or any other financial instruments that is in substance a forward exchange contract to hedge the foreign currency risk which is on account of firm commitment and/or is a highly probable forecast transaction, the premium or discount arising at the inception of the contract is amortized as expense or income over the life of the contract.

Gain/Loss on settlement of transaction arising on cancellation or renewal of such a forward exchange contract is recognized as income or as expense for the period.

In all other cases the gain or loss on contract is computed by multiplying the foreign currency amount of the forward exchange contract by the difference between the forward rate available at the reporting date for the remaining maturity of the contract and the contracted forward rate (or the forward rate last used to measure a gain or loss on that contract for an earlier period), is recognized in the profit and loss account for the period.

Employee benefits
Contributions to defined Schemes such as Provident Fund, Employee State Insurance Scheme and Superannuation are charged as incurred on accrual basis. The Company also provides for gratuity and leave encashment in accordance with the requirements of revised Accounting Standard - 15 "Employee Benefits".

i) Taxes on income
Tax expense for the year comprises of current tax and deferred tax. Current taxes are measured at the amounts expected to be paid using the applicable tax rates and tax laws. Deferred tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantively enacted by the balance sheet date. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the profit and loss account in the year of change. Deferred tax assets and deferred tax liabilities are recognized for the future tax consequences attributable to differences between the financial statements carrying amounts of existing assets and liabilities and their respective tax bases and operating loss carry forwards.

j) Earnings Per Share
The earnings considered in ascertaining the Company's Earnings Per Share (EPS) comprises the net profit after tax (and includes the post tax effect of any extra ordinary items). The number of shares used in computing Basic EPS is the weighted average number of shares outstanding during the year. The number of shares used in computing Diluted EPS comprises of weighted average shares considered for deriving Basic EPS, and also the weighted average number of equity shares which could have been issued on the conversion of all dilutive potential equity shares. Dilutive potential equity shares are deemed converted as of the beginning of the year, unless they have been issued at a later date. The diluted potential equity shares have been adjusted for the proceeds receivable had the shares been actually issued at fair value (i.e. average market value of the outstanding shares). The number of shares and potentially dilutive shares are adjusted for share splits/reverse share splits and bonus shares, as appropriate.

k) Associate Stock Option scheme
Stock options granted to the associates under the stock option schemes established after June 19, 1999 are evaluated as per the accounting treatment prescribed by Employee Stock Option Scheme and Employee Stock Purchase Scheme Guidelines, 1999 issued by Securities and Exchange Board of India. Accordingly the excess of market value of the stock options as on the date of grant over the exercise price of the options is recognized as deferred employee compensation and is charged to profit and loss account on graded vesting basis over the vesting period of the options. The un-amortized portion of the deferred employee compensation is shown under Reserves and Surplus.

l) Research and Development

Revenue expenditure incurred on research and development is charged to revenue in the year/period in which it is incurred. Assets used for research and development activities are included in fixed assets.












Financial Statement:-
Balance Sheet Statement


Profit & Loss Statement:-









Ratio Analysis :-
Ratio Analysis is an important tool for undertaking the financial statement analysis of any organization. The performance of any organization can be explained on the basis of the four types of ratios:-
1) Liquidity Ratio
2) Solvency Ratio
3) Profitability Ratio
4) Market Based Returns
So in case of Ashok Leyland Ltd. following are the various ratios of the annual report of 2007-2008 by analyzing the balance sheet and Profit & Loss Account.
Current Ratios & Quick Ratios

Current Ratio measure the ability of the enterprise to meet its current obligations & is the relationship between Current Assets and Current Liabilities. In the operating cycle and by seeing the trend the ratio is decreasing over period. So higher the Current Ratio, higher the short-term liquidity of the firm. A Current Ratio of 2:1 is generally considered to be acceptable. If the Current Ratio is greater than 1, it implies that some portions of the current assets is being funded by the long term funds and if it is decreasing over time it means that the firm is losing its liquidity.

Interpretation
In the Current Trend Analysis it was found that Current Ratio was declining for the past five years which shows a concern on Liquidity of the firm but been ideal ratio been 2:1 still favours the company about its liquidity to pay of short term liabilities. It has also been analysed that the Company does not have an Inventory in its closing stock so its Quick Ratio & Current Ratio is same




Profitability Ratio:
The profitability ratio consists of a group of ratios that indicates the ability of a firm to generate and distribute profit. The higher is this ratio the better is this for the company. The profitability of a firm can be analyzed by studying the following:

Gross Profit Margin

Gross profit Ratio shows the profits relative to sales after the direct production costs are deducted. It may be used as an indicator of the efficiency of the production operation and the relation between production costs and selling price.
Interpretation
If we see the graph the trend is slowing decreasing that means the efficiency of the firm is firmly declining because of increase in cost without change in sale prices and hence management should take care of Operational strategies.

Net Profit Ratio:
Net Profit Ratio shows the earning left for shareholders (both equity and preference) as a percentage of net sales. It measures the overall efficiency of production, administration, selling, financing, pricing, and tax management.

Interpretation
It sees that the company has increased its expenses in comparison to increase in sales which has effected its Net Profitability.

Return On Equity
Return On Equity Helps to understand about the return been earned by the company on its investment and helps in knowing the utilization of funds
Interpretation
Here, we find in the graph that there has been a slight decrease which shows that company might not be earning good returns as compared to earlier years .

Return On Assets

Interpretation
The Company’s Return on Assets show that the Proper utilization of assets are been made by the company in comparison to increase in sales in long run but in short run the company needs to work out strategies for increasing its return which is decreasing.



Fixed Asset Turnover

Interpretation
If we see the trend of this graph we see that the graph is increasing in 2007-2008 & the trend is somewhat increasing that means the asset base had started increasing. It could be because assets has been properly capitalized by ther company and return on assets are good.

Leverage Ratios:-
Solvency ratios are the group of ratios which show the ability of a firm to meet its long term loans. It gives an indication of how a business is financing its assets. It is one of the major financing decisions for the company. It is also called the capital structure of a firm. Following are the ratios that are matters of concern to any organization:-

Interest Coverage Ratio
Coverage ratios give the relationship between the financial charges of a firm and its ability to service them. One measure of a firm’s ability to handle financial burdens is the interest coverage ratio, also referred to as the times interest-coverage ratio. This ratio tells us how many times the firm can cover or meet the interest payments associated with debts.


Interpretation
We have first an downward trend and now this trend is showing a upward shift in 2007-08 that means that now the firms ability to pay its interest expense is increasing in this period.

Ownership Ratios:-
These ratio will help the stockholders to analyze their present and future investment in a firm. Stockholders are interested to know how the value of their holdings is affected by certain variables. These ratios compare the investment value with factors such as debt, earnings,dividends and the stock’s market price. By understanding the liquidity and profitability ratios, one can gain insights into the soundness of the firm’s business activities, whereas by analyzing the ownership ratios, the analyst can assess the likely future value of the market.
Earnings Ratios:-
The earnings ratios are Earning per share, price-earning ratio(P/e Ratio) and capitalization ratio.
Earning Per Share( EPS):-
For calculating EPS we first calculate No. of Outstanding shares that is given by
Shareholders Capital
Face Value of Shares






Interpretation:
The Firm capability to pay its investors has been good and firm is doing well and during the year since there is a positive increase in EPS & the investors stock value has increased in comparison .

Price Earning Ratios :-
This ratio gives the relationship between the market price of the stock and its earnings by revealing how earnings affect the market price of the firm’s stock. It is the most popular financial ratio in the stock market for secondary market investors. The main use of P/E ratio is it helps to determine the expected value of a stock.

Interpretation
From the above trend it can be seen that the P/Ae ratio is decreasing – EPS is decreasing and market price is continously decreasing- that simply means that the stock is not performing good on any index.

Capitalization Rate:-
The P/E ratio also may be used to calculate the rate of return investors expect before they purchase a stock. The reciprocal of the P/e ratio gives this return.


From the above trend it is clear that the rate of return to the investor first decreased and now gradually it is increasing. In the long run it will surely give return on its stock.

RECOMMENDATIONS:
To Management:
It has been analyzed that Solvency and Profitability has been steady for the company but an improvement in Debtors Turnover Ratio’s can help company in boosting the profits.

To Creditors
Short Term Creditors: The Company’s financial strength is good and anytime during the year the company can pay the amount as and when due.
Long Term Creditors: The Company is perfectly solvent and can pay debt and interest on it on proper time.

To Government
Been an FMCG Company, there has been a great progress by the company during the year and has large scope to progress with greater service capability

To Financial Institutions
The Profit Earning Capacity and Long Term Solvency position shall not be a concern because of good performance during the past years.
To Investors
It has been analyzed that the company is a Going Concern Entity with a Market Price of around Rs.1400, EPS of around Rs. 80 which shows that the company has a bright future prospect which can lead to huge Returns.

To Employees
The Performance of the Company has improved during the year which shows that if the company performs in the same manner there are huge opportunities for the company to reach new heights.

Hey pranya, thanks for sharing the ratio analysis of Satyam and i am really impressed by your effort and appreciate it. BTW, i have also got a document on Satyam ration analysis and would like to share it with you. So please download it and check.
 

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